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lower. Finally, the high cost of transporting heavy-truck and bus bodies from overseas suppliers also favors at least partial local assembly or manufacturing. A rough estimate of the value of LDC vehicle production in 1988 is $90 billion, including $45 billion in Eastern Europe. Estimates of component sales are not available. LDC automotive exports amounted to about $8 billion in 1987, of which about $5.5 billion reflected sales of vehicles—mostly subcompact passenger cars and light commercial vehicles—while the rest was sales of components. LDC vehicle exports are

Vizhdan Boranova, Raju Huidrom, Ezgi O. Ozturk, Ara Stepanyan, Petia Topalova, and Shihangyin (Frank) Zhang

accruing to economies in Asia, and, to a smaller extent, Latin America ( Figure 3 ). Figure 3A. Global Vehicle Production by Region (Millions) Source: OICA. Figure 3B. Share of Global Vehicle Production by Region (Percent) B. What Happened to the Auto industry during the COVID-19 Pandemic? The pandemic greatly affected activity in Europe, and the auto industry was no exception . The initial lockdowns in 2020 hit manufacturing severely, and, given its large footprint, a considerable fraction of the collapse in industrial production was due

Vizhdan Boranova, Raju Huidrom, Ezgi O. Ozturk, Ara Stepanyan, Petia Topalova, and Shihangyin (Frank) Zhang
The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.